SURE-P expenditure (the flagship program to develop the social safety net and promote infrastructure development) is allocated in the same way as oil revenue, including derivation. In contrast, VAT revenue is distributed 50 percent to the states, 36 percent to local governments and FCT Abuja, and 14 percent to the Federal Government.
Molini, Vasco, Gbemisola Oseni, and Paul Corral, 2014, “No condition is permanent: The dynamic story of poverty and the emerging middle class in Nigeria.”
Stacy Carlson, Era Dobla-Norris, Mika Saito, and Yu Shi, 2014, “Household Financial Access and Risk Sharing in Nigeria.”
Input-output multiplier models capture the inter-sectoral linkages within an economy and can be used to estimate the economy-wide effects of a change in final demand. These models, however, typically assume time-invariant technical (production) coefficients, constant returns to scale, and no supply constraints. Thus, the underlying model parameters do not capture economic agents’ behavioral responses to the initial shock, an issue that is more poignant for medium-to-long term projections. Further, the results are conditional on the accuracy of the input-output coefficients and how well the model captures the structure of the economy.
The IO Table presented here is short of a complete IO table.
It is a simplified version because this exercise is done for 32x32 IO Table.
Value added comprises wage compensations, operating surpluses, consumption of fixed capital, and taxes net of subsidies, but this note focuses on the first two largest components.
This is equivalent to assuming income elasticity of 1.
The income elasticity with respect to imports is also assumed at 1. Note that only income effects are taken into account here.
According to the 2014 Corporate and Indirect Tax Rate Survey by KPMG, only Aruba has a lower standard VAT rate among a sample of 109 countries with VAT.
The VAT efficiency is computed as the ratio of actual VAT receipts to the product of final consumption and the standard VAR rate.